Northrop Grumman awarded $27.4M for aircraft structural component repair, with limited competition

Contract Overview

Contract Amount: $27,381,096 ($27.4M)

Contractor: Northrop Grumman Systems Corp

Awarding Agency: Department of Defense

Start Date: 2002-01-01

End Date: 2009-08-12

Contract Duration: 2,780 days

Daily Burn Rate: $9.8K/day

Competition Type: NOT COMPETED

Number of Offers Received: 1

Pricing Type: COST PLUS AWARD FEE

Sector: Defense

Official Description: 200206!000099!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !Y!SD22 !20020101!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000022982552!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!M! !C!C!20021231!B!F!N!A! !D!N!R!1!001!N!1A!C!Y!Z! ! !N!C!N! ! ! !A!A!A!A!000!A!B!N! ! ! ! ! ! !0001!

Place of Performance

Location: PALMDALE, LOS ANGELES County, CALIFORNIA, 93550

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $27.4 million to NORTHROP GRUMMAN SYSTEMS CORP for work described as: 200206!000099!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !Y!SD22 !20020101!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS A… Key points: 1. Contract awarded for repair of aircraft structural components, specifically for the B-2 stealth program. 2. The contract was not competed, raising questions about potential value for money. 3. Limited competition suggests potential for higher pricing than a fully competed contract. 4. The contract duration is substantial, spanning over 7 years. 5. The contractor, Northrop Grumman, is a major defense contractor with significant experience. 6. The contract falls under the 'Other Aircraft Equipment' category, indicating specialized services.

Value Assessment

Rating: questionable

The contract value of $27.4 million for aircraft structural component repair over nearly 8 years warrants scrutiny. Without a competitive bidding process, it is difficult to benchmark the pricing against market rates or similar contracts. The 'Cost Plus Award Fee' (CPAF) contract type can sometimes lead to higher costs if not managed carefully, as it incentivizes the contractor to meet certain performance targets which can increase the overall fee. Further analysis would be needed to compare the per-unit costs or labor rates to industry standards for similar repair services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: sole-source

This contract was awarded on a sole-source basis, meaning it was not competed among multiple vendors. This approach is typically used when only one vendor possesses the necessary capabilities, technology, or security clearances to perform the required work. In this case, it is likely that Northrop Grumman, as the original manufacturer or a highly specialized entity, is the only qualified provider for the repair of B-2 stealth aircraft structural components. The lack of competition means that the government did not benefit from price discovery through multiple bids.

Taxpayer Impact: Taxpayers may have paid a premium due to the absence of competitive pressure. Without bids from other companies, there is less assurance that the price reflects the lowest possible cost for the required services.

Public Impact

The primary beneficiaries are the U.S. Air Force and the personnel operating the B-2 stealth bomber fleet, ensuring the continued operational readiness of these critical assets. The services delivered involve the maintenance and repair of structural components for aircraft, crucial for flight safety and performance. The geographic impact is likely concentrated around facilities where the B-2 fleet is based and maintained, primarily within the United States. The contract supports specialized technical jobs within Northrop Grumman, contributing to the aerospace and defense workforce.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of competition may lead to inflated costs.
Sole-source award limits transparency in pricing.
Cost Plus Award Fee structure requires diligent oversight to control expenses.
Long contract duration increases exposure to potential cost overruns.

Positive Signals

Contract awarded to a highly experienced defense contractor with proven capabilities.
Focus on critical aircraft structural components ensures operational readiness of advanced platforms.
The contract is for essential maintenance and repair, supporting national security.
The specific nature of B-2 stealth components likely necessitates specialized expertise.

Sector Analysis

This contract falls within the aerospace and defense sector, specifically focusing on aircraft maintenance and repair. The market for specialized aircraft component repair, particularly for advanced platforms like the B-2 stealth bomber, is highly concentrated among a few major defense contractors. Spending in this area is driven by the need to maintain the operational readiness and longevity of aging military fleets. Comparable spending benchmarks would typically involve analyzing other sole-source or limited-competition contracts for similar specialized repair services on high-value military aircraft.

Small Business Impact

There is no indication that this contract included a small business set-aside. Given the specialized nature of repairing structural components for the B-2 stealth bomber, it is unlikely that small businesses would possess the required expertise or certifications. Therefore, subcontracting opportunities for small businesses may be limited unless they are suppliers of raw materials or standard components to the prime contractor. The overall impact on the small business ecosystem for this specific contract is likely minimal.

Oversight & Accountability

Oversight for this contract would primarily reside with the Department of the Air Force contracting officers and program managers. As a Cost Plus Award Fee (CPAF) contract, performance metrics and fee determination would be subject to rigorous review. Transparency may be limited due to the sole-source nature, but contract modifications, performance reports, and financial expenditures would typically be tracked. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

B-2 Bomber Sustainment Programs
Air Force Aircraft Maintenance Contracts
Defense Contractor Service Agreements
Aerospace Component Repair Services

Risk Flags

Sole-source award
Cost Plus Award Fee contract type
Lack of competitive pricing data
Long contract duration

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $27.4 million to NORTHROP GRUMMAN SYSTEMS CORP. 200206!000099!5700!GD30 !OKLAHOMA CITY ALC/LAD !F3365799D0028 !A!N! !Y!SD22 !20020101!20021231!362686958!008255408!016435559!N!NORTHROP GRUMMAN SYSTEMS CORPO!3520 EAST AVENUE M !PALMDALE !CA!93550!55156!037!06!PALMDALE !LOS ANGELES !CALIFORNIA!+000022982552!N!N!000000000000!J015!MAINT & REPAIR OF EQ/AIRCRAFT STRUCTURAL COMPS !A1C!OTHER AIRCRAFT EQUIPMENT !3ABK!B-2 STEALTH !811219!E! !5!B!M! !C!C!20021231!B

Who is the contractor on this award?

The obligated recipient is NORTHROP GRUMMAN SYSTEMS CORP.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Air Force).

What is the total obligated amount?

The obligated amount is $27.4 million.

What is the period of performance?

Start: 2002-01-01. End: 2009-08-12.

What is Northrop Grumman's track record with the B-2 program and similar aircraft maintenance contracts?

Northrop Grumman is the prime contractor for the B-2 Spirit stealth bomber, responsible for its development, production, and sustainment. They have a long-standing and extensive track record with this specific platform, including maintenance, upgrades, and component repair. Their experience extends to other complex military aircraft programs, positioning them as a key provider of specialized services. Analyzing their past performance on similar contracts, particularly those involving sole-source awards or CPAF structures, would reveal their ability to manage costs and deliver required performance within established parameters. Historical data on contract modifications, cost overruns, and award fee payouts for Northrop Grumman on defense contracts would provide further context.

How does the pricing of this contract compare to industry benchmarks for aircraft structural component repair?

Directly comparing the pricing of this sole-source contract to industry benchmarks is challenging due to the lack of competitive bidding and the highly specialized nature of B-2 stealth components. Standard industry benchmarks for general aircraft repair may not be applicable. To assess value, one would need to analyze Northrop Grumman's internal cost structures, labor rates, and material costs associated with this specific repair work. Comparing the 'Cost Plus Award Fee' components to similar fee structures on other sole-source defense contracts could offer some insight. However, without access to detailed cost breakdowns and competitive proposals, a definitive benchmark comparison is difficult.

What are the primary risks associated with this sole-source, Cost Plus Award Fee contract?

The primary risks associated with this sole-source, Cost Plus Award Fee (CPAF) contract include potential cost overruns and a lack of robust price competition. Since the contract was not competed, there's a risk that the government is paying a premium for the services. The CPAF structure, while incentivizing performance, can also lead to increased costs if the award fee criteria are not tightly managed or if the contractor inflates costs to maximize their fee. Another risk is contractor dependency; the government becomes reliant on a single provider for critical repairs, potentially limiting leverage in future negotiations. Ensuring stringent oversight and performance monitoring is crucial to mitigate these risks.

How effective has Northrop Grumman been in delivering services under similar 'Cost Plus Award Fee' contracts with the Department of Defense?

Northrop Grumman has a history of performing under 'Cost Plus Award Fee' (CPAF) contracts with the Department of Defense across various programs. The effectiveness of these contracts is typically measured by the contractor's ability to meet performance objectives while managing costs within acceptable ranges, thereby earning a significant portion of the award fee. Historical data from contract performance reports and Inspector General audits can shed light on their success. Generally, CPAF contracts require diligent government oversight to ensure that the award fee is earned based on genuine performance improvements and efficiencies, rather than simply meeting baseline requirements. Analyzing past award fee determinations for Northrop Grumman on similar contracts would indicate their proficiency in this area.

What are the historical spending patterns for aircraft structural component repair within the Department of the Air Force, and how does this contract fit?

Historical spending patterns for aircraft structural component repair within the Department of the Air Force are substantial, driven by the need to maintain a large and aging fleet of diverse aircraft. This spending is often characterized by a mix of competitive contracts for common parts and repairs, and sole-source or limited-competition contracts for highly specialized systems like those on the B-2 bomber. This particular contract, valued at $27.4 million over nearly eight years for B-2 components, represents a significant investment in sustaining a critical, low-density, high-cost asset. It fits within the pattern of specialized, high-value sustainment contracts awarded to original equipment manufacturers or highly qualified prime contractors due to unique technical requirements and security considerations.

Industry Classification

NAICS: Manufacturing › Aerospace Product and Parts Manufacturing › Aircraft Manufacturing

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: NOT COMPETED

Solicitation Procedures: ONLY ONE SOURCE

Offers Received: 1

Pricing Type: COST PLUS AWARD FEE (R)

Evaluated Preference: NONE

Contractor Details

Parent Company: Northrop Grumman Corporation (UEI: 967356127)

Address: 3520 E AVE M, PALMDALE, CA, 93550

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business

Contract Characteristics

Commercial Item: COMMERCIAL ITEM PROCEDURES NOT USED

Cost or Pricing Data: YES

Parent Contract

Parent Award PIID: F3365799D0028

IDV Type: IDC

Timeline